THE ONLY “EFFECTS” OF SCOTT MORRISON’S TEST WILL BE HIGHER GROCERY PRICES - Media Release

Posted by Andrew Leigh Mp48sc on September 05, 2016

Today’s effects test announcement shows the extent to which Malcolm Turnbull and Scott Morrison have sacrificed good economic policy in order to keep the National Party on side.

As a member of the Abbott Government, Malcolm Turnbull opposed an effects test in Cabinet. So did Julie Bishop and George Brandis.

The only reason the Turnbull Government is announcing an effects test today is that it was a condition of the secret agreement between the Liberals and Nationals for Mr Turnbull to become Prime Minister.

Since 1976, 12 Australian competition reviews have considered an effects test. Ten of these reviews have recommended against it. An effects test is opposed by Graeme Samuel, the former Chair of the Australian Consumer and Competition Commission, and in a recent report by the Productivity Commission.

Labor does not support an effects test because it is likely to cripple legitimate competition, depress innovation, deter investment and frighten companies from lowering prices on groceries.

Coles have warned that an effects test might spell an end to uniform grocery pricing – the system that ensures packaged groceries are sold at the same price in Toorak and Tamworth. Ironically, regional and remote areas would suffer most if uniform pricing came to an end.

An effects test would be a lawyers’ picnic. Retailers could be threatened with court action if they become too competitive, and might be forced to raise prices.

When it comes to keeping prices low, smart competition laws are one of the best tools that governments have. But these laws only work if they’re ferociously pro-consumer.

You only need to know one thing about the effects test: it’s the brainchild of Barnaby Joyce – who is on record saying that a litre of milk should cost closer to $11 than $1.